Your enterprise talent management strategy needs to look beyond your full-time employees. It's time to incorporate your extended workforce into your 2020 plan.
Talent is everywhere, right under our noses in our own organizations, increasingly taking form beyond traditional definitions of full-time employees. The state of modern employment is one of flexible, made-to-order employment relationships, where talent is no less valuable to organizational goals and top-line performance if they are freelance, temporary, gig, contractor, vendor, returning to work or boomerang hire.
Blueprinting available talent wherever it sits and however they like to work is critical to workforce planning and a powerful competitive differentiator in one of the tightest labor markets we will see in decades. Deloitte's 2019 top 10 HR trends survey found that 41% of respondents felt alternative workforce was important or very important to their organization's future success over the next 12-18 months.
Organizations need a total talent management strategy.
Companies that look at their Extended Workforce (i.e., contingent workforce, alternative workforce) as part of their Talent Strategy are more successful. We barely understand the availability, capabilities and directional aspirations of our fully payrolled talent; including the Extended Workforce in that purview presents a massive talent blind spot and opportunity.
Most organizations today have multiple systems of record for people data (like HR core systems, vendor management systems, and identity management systems). Even if they store contractor data in a single HR core system, teams are commonly not tracking critical information about the rest of the Extended Workforce population like freelancers, consultants or people providing outsourcing services. Enterprise systems have large blind spots to this kind of talent.
Contingent and gig work is changing the market; alternative work relationships are becoming more standard. More than 40% of the U.S. workforce now engaged in gig or contract work. ADP reported a 4% drop in the number of W-2s filed for annual employment tax reporting from 2000 to 2016 alongside a 23% increase in the number of 1099s filed by independent contractors for the same period.
In Josh Bersin’s 2020 report, though, only 16% of companies indicate they have a strategy for managing the Extended Workforce and their projects, probably because most non-traditional workers are hired by line managers and administered through the purchasing department.
Companies who have visibility to all of the different types of talent at their disposal, who have true line of sight to how work is getting gone, by whom, with what skills, performed where and at what value, will have immediate and significant competitive advantage. That includes an understanding of key information like skills, credentials and training certifications for previous freelancers, contractors and consultants the organization has used in the past.
Tracking this type of information has proven very difficult to manage because there is no single source of the truth for all this talent data. What is needed is a solution that:
- Brings together all talent data from disparate systems
- Enables a simple way to track non-traditional workers and assignments
- Provides visibility and insight into all of the people who provide value to the organization
Existing systems of record are inadequate in managing a contingent workforce.
As an important area of the enterprise infrastructure, organizations have systems of record for their people data. That is what Human Capital Management (HCM) systems maintain. Much of the move to the Cloud has been focused on consolidating disparate HCM systems globally so that HR leaders can, at a minimum, provide global headcount data in various dimensions to other business leaders. That’s assuming HR and Finance can agree on definitions, which can also be a challenge. This is necessary, but it’s still not sufficient to meet today’s talent management challenges.
HCM systems provide information on employees (full-time, part-time, seasonal, etc.). In most cases, however, contingent workforce data are not included. For non-employees, there are a variety of different systems that help recruit and pay Extended Workforce talent like freelancers, contractors, consultants and other types of contingent workers. Examples include Vendor Management Systems, Freelance Management Systems, and Digital Marketplaces and normally are reviewed and owned by a company’s Services Procurement organization.
Under the Finance arm within an organization, Procurement -- not HR -- typically drives the licensing of these types of sourcing solutions. Using external vendors often require fairly complex payment methods on different payment cycles, and Procurement teams manage this. While it may offer payment processing benefits, the systems are not configured to what’s important to HR. Hence, these systems don’t collect a lot of relevant people data nor are metrics shared with HR stakeholders.
Then there’s the second challenge with this so-called “maverick spend” for contractors and contingent workers. Often not visible even to Procurement, this happens when business line managers work with staffing, consulting firms or directly with individual contractors who are not preferred providers with pre-negotiated billing rates.
From the perspective of understanding the makeup of talent available to drive the growth of an organization, we create a massive blind spot. Yet, most HR and recruiting teams who are supporting business line leaders know or track next to nothing about the skills and capabilities of contingent workers, unless they look it up skill by skill on their LinkedIn profiles.
Also, contingent workforce management solutions may not capture the individual consultants who work on projects for your organization or outsourcers who provide services to your organization.
We have not even delved into other aspects of the Extended Workforce, like freelancers and gig workers, typically engaged with through marketplace platforms like Upwork, Fiverr, Catalant and Shiftgig.
Use of this talent typically may not be captured in any enterprise system. Managers will typically use these platforms and marketplaces to find and engage with talent and pay with a credit card. Just think about the fact that 94% of the new jobs created in the US from 2005 to 2015 were classified as alternative workforce according to Deloitte's Future of Work study.
Not understanding what all the talent an organization utilizes and where best to leverage it is what we call the talent blind spot. To truly understand the talent you have in your organization and available to your organization requires a different way of thinking and a new approach.
We need a new and different approach to engage with contract and freelance talent.
If there’s a secret weapon in the war for talent, it may just be the 60 million people participating in contract, freelance, or gig work. In Josh Bersin’s recent research among HR organizations, however, only 8% of respondents felt their companies were ready to manage gig or contract workers well, yet 65% said it was critical or very important.
A resounding 41% or organizations confirmed gig and contract workers are a significant part of their workforce. The company who best activates all available talent sitting within the organization - putting the entire extended workforce in play - will have tremendous competitive advantage to those who ignore this talent blind spot.
So what is needed for organizations to capitalize on the opportunity at hand? What is needed is a new platform that can:
- Elegantly integrate with existing solutions (HCM and Contingent Workforce Management systems) inside the enterprise and outside the enterprise (freelance/gig platforms and marketplaces)
- Allow organizations to easily add individual workers (or groups of workers) who may not be tracked in any system
- Enable organizations to enrich non-employee data where needed, including the ability to capture their knowledge, skills, abilities – i,e., the talent profile
- Use common language in order to complete the talent picture with the employee population and help provide a single view into talent and skills
This new platform needs to be able to easily provide visibility to the full set of talent data. If a platform cannot do that, talent blind spots remain unaddressed.
Tracking all your talent is the starting point.
This is just the starting point for really thinking differently about your full workforce, both your employees and the extended workforce. The basics - tracking all of your talent - is really table stakes and a good starting point.
If you are truly going to take the best advantage of your full workforce, you need to think differently in all aspects of talent management: from how you find talent; how you engage with them; how you develop, praise talent, and manage talent; and how you compensate talent. The next post in this series will break down these changes and how enterprise solutions need to evolve.
About the Author
Jim Holincheck has more than 25 years of experience in the HCM technology industry and is the Vice President of Advisory Services at Leapgen. Before joining Leapgen, Jim gained experience as a vendor (Workday - Services Strategy and Product Management), an industry analyst (Gartner and Forrester/Giga), and a consultant (Accenture).
Jim has spent his entire career working with customers to strategize, select, implement, support, and optimize their usage of enterprise applications. Helping customers successfully get the most out of their enterprise software investments is something Jim is very passionate about. He launched his career in Chicago at Andersen Consulting (now Accenture) in its Software Intelligence group, where he worked on the full lifecycle of Financial and HCM application projects, including application strategy, requirements definition, software selection, implementation, and production support.
After ten years at Andersen Consulting, Jim moved to Giga Information Group (acquired by Forrester), where he was an industry analyst covering ERP applications. In 2000, he joined a startup, IQ4hire, to create a consulting marketplace around ERP and CRM applications. In 2002, Jim joined Gartner as an analyst covering the HCM market, where he also managed the research agenda for Financials, HCM, and Procurement applications. Jim graduated from Washington University with a BS in Electrical Engineering and an MBA in 1988.
Leapgen is a global digital transformation company shaping the future of work. Highly respected as a visionary partner to organizations looking to design and deliver a digital workforce experience that will produce valued outcomes to the business, Leapgen helps enterprise leaders rethink how to better design and deliver workforce services and architect HR technology solutions that meet the expectations of workers and the needs of the business.